GBP/USD extends BOE-led losses towards 1.3900 amid quiet session

• GBP/USD remains depressed after snapping three-day uptrend on BOE.
• Mixed updates on Brexit, Delta Plus covid variant keeps bears hopeful.
• BOE quarterly bulletin eyed to reconfirm policymakers’ bearish bias.
• US data, risk catalysts may try avoiding sluggish markets.

GBP/USD holds on to the previous day’s weakness while easing to 1.3919 during a sluggish Asian session on Friday. The Bank of England (BOE) policymakers’ inability to provide hawkish statements weighed down the cable pair on Thursday whereas the recent US dollar strength seems to keep the pair sellers hopeful.

Although the “Old Lady” matched wide market expectations of announcing no change to the benchmark interest rates and bond purchase program, the MPC members’ refrain from voting any policy change probed the GBP/USD buyers amid the covid variant fears. Also negative for the quote was the BOE statement saying,  "The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably."

Meanwhile, optimism of the Brexit negotiators from the European Union and the UK over the Northern Ireland sausage war battles comments from British Diplomat Lord Frost. “I don’t think those who campaigned, five years ago for Brexit drove the analysis, drove the politics of it. I think they are surprised, quite often, to find relations are in the state they’re in,” The Guardian conveyed Frost’s comments.

Elsewhere, the UK’s covid conditions start deteriorating and weigh on the GBP/USD prices. As per the latest update from the Evening Standard, “The UK has recorded 21 deaths Coronavirus deaths in the past 24 hours and another 16,703 cases - the highest number of positives since February 6.”

On a broader front, US President Biden’s ability to get the infrastructure spending through the Senate initially favored market sentiment but the Fed’s removal of share purchase and dividend restrictions on large banks probed optimists afterward.

Amid these plays, S&P 500 Futures print mild gains but the US Treasury yields struggle after a two-day uptrend.

With the quarterly release from the BOE up for publishing around noon, GBP/USD traders will search for clues to confirm the previous day’s bearish bias. Also important are the second-tier US data and risk catalysts that may entertain traders amid a likely dull day.

Technical analysis

Failures to stay beyond 100-day SMA level of 1.3950 direct GBP/USD towards the weekly low near 1.3785. However, the previous month’s low surrounding the 1.3800 could test the bears.